The Home Ownership Preservation Initiative in Chicago (HOPI): Reducing Foreclosures through Strategic Partnerships

1. The Home Ownership Preservation Initiative in Chicago (HOPI):Reducing Foreclosures through Strategic Partnerships Bruce Gottschall, Executive Director Neighborhood Housing Services of Chicago

2. Neighborhood Housing Services of Chicago • Who is NHS – The mission of NHS is to help neighborhoods stay strong – by helping people buy, fix or stay in their homes. We are a not for profit community organization that has been working in Chicago neighborhoods for 30 years. We have 8 local offices that serve 9 targeted neighborhoods: • Auburn Gresham/Englewood West Englewood – 60620 & 60636 • Back of the Yards/Garfield Boulevard – 60609 & 60621 • Chicago Lawn/Gage Park - 60629, 60632 & 60652 • North Lawndale – 60623 & 60612 • West Humboldt – 60624 & 60651 • Roseland – 60628 • South Chicago – 60617 • Central Office – Provides City-Wide programs • We Serve 1-4 unit homeowner occupants

3. Foreclosures ThreatenedChicago’s Neighborhoods

4. Fast Foreclosures in NHS Targeted AreasHalf of Loans Start Foreclosures within 3 years of OriginationDramatic increase Since 1993 52% of all loans starting foreclosure in 2001 were originated after 1998 72% of loans which were priced 300 basis points over 30 year Treasury and starting foreclosure in 2001,were originated after 1998

5. NHS Case Study of Foreclosure Impact:

6. Chicago’s Home Ownership Preservation Initiative (HOPI)Model Partnership Between: NHS City of Chicago, Department of Housing Federal Reserve Bank of Chicago Major Lenders/Servicers

7. Chicago’s HOPI Approach • Quality homeowner education to prevent current and future delinquencies. • Direct Interventions to assist homeowners at risk of foreclosure. • Reclaim foreclosed homes for owner-occupants • Study mortgage and servicing impacts on neighborhoods to develop best practices as a “laboratory” for training and replication

8. Chicago’s Home Ownership Preservation Initiative (HOPI)

9. HOPI Approach • Borrower Access/Entry to Counseling and Support System • Appropriate and Escalating Forms of Counseling and Support • Comprehensive Loss Mitigation Effort and Resources • REO Disposition • Community Partnership and Neighborhood Engagement • “Laboratory Role”

10. Survey Findings of NHS Counseled Families • Demographics of HOPI Clients • 73% Women • 81% African American • 15% Hispanic • Length of time lived in Home • Mean 10 years • Median 7 years • Income • Mean $27,000 (38% of AMI) • 1/3 below $18,000 (25% of AMI) • Average delinquency was 5.4 months when contacted by NHS Source: NHS Chicago – Survey, 2005 (800 clients)

11. Profile of Respondents • 69% First-time Buyers • 55% First-time Refinancers • 52% First-time Defaulters • Median Purchase Time: 5 years ago • Median Mortgage Balance: $87,500 • 62% have filed for Bankruptcy at some point • Average Delinquency: 4.6 Months (up to 3 years) Source: NHS Chicago-Defaulted Borrowers Survey, 2005 (289 respondants)

12. 72% of Defaulted Loans are Refinances Source: NHS of Chicago-Defaulted Borrowers Survey, 2005 (183/289 respondents)

13. Why, if Behind, Did not Contact Lender? Source: NHS Chicago-311 Survey, 2005 (56/289 respondents)

14. NHS of Chicago Resources: • Intensive Foreclosure Counseling • Foreclosure Intervention Program • Below-market rate loans to reinstate a mortgage • Homeownership Preservation Initiative Refinance And Refinance/Rehab Loans

15. Public-Private Partnerships Maximize Impacts • State Housing Agency • Referral networks • Payment assistance • Emergency loans • Training for counselors • Financial support for nonprofits • Credit Counselors • Phone counseling • Manage hotlines • Budgeting • Debt management plans • Lenders / Servicers • Forbearance • Loan modification • Counseling referrals • Support for collaborations • Nonprofit Housing Counselors • In-person counseling • Borrower education • Housing issues • Facilitate workouts • Administer grants/loan • City / State Government • Hotlines • Public awareness • Facilitating collaboration

16. Connecting Distressed Borrowers to Services Distressed Borrower 3 1 Contact Lender / Servicer 2 Contact Community-based Organization (3rd party will increase trust, information or change behavior) Call Hotline to Credit Counseling Refer to Community-based Organization Improve Budgeting Connect with Lender/Servicer (50% of delinquent borrowers not in contact) REO Disposition Home resold to mortgage ready borrower Increase Timely Payments (20-30% of borrowers only need budget management) Property Services Home preserved for resale or continued ownership Emergency Loan or Grant Forbearance or Workout Preserves: BorrowerHouseNeighborhood

17. HOPI – Three Year Goals • Homeownership Preservation • Help 1,500 families avid foreclosure Property Preservation • Reclaim 300 foreclosed properties as community assets Community Development • Cultivate community development best practices

18. HOPI Results: April 2003 – March 2005 • 2,770 homeowners completed counseling • 530 through workshops in community • 800 through 311; 56% paid for by participating lenders • Estimated 37% of 311 callers cured problem or sold home within a year of receiving services • 940 Foreclosures prevented • 175 Buildings reclaimed from foreclosure Source: The Chicago Hone Ownership Preservation Initiative: A Learning Laboratory, Neighborhood Housing Services of Chicago, Inc. June 2006

19. City of Chicago Foreclosures 1999-2004

20. Emerging Trends • Mortgage Rescue • Distressed property consultants and • Distressed property purchasers • “Flip and Default” • “No Doc” • “Fee for Service” • “Buy Lease Back”